ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Q7. Select 1 answer for each question.
QUESTION 7
Review the following figure. Suppose the price of gasoline is $1.60 per gallon.
▪ What would happen to the quantity demanded?
. What would happen to the quantity supplied?
. At $1.60, is the market in equilibrium, a shortage, or a surplus?
P ($ per gallon)
$2.20
$1.80
$1.40
$1.20
$1.00
50.60
Excess supply
or surplus
An above-aquilibrium price
Equilibrium price
A below-equilibrium price
Excess demand D
or shortage
300 400 500 600 700 800 900
Quantity of Gasoline (millions of gallons)
rise
fall
surplus
shortage
no change
a shift in demand
a shift in supply
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Transcribed Image Text:QUESTION 7 Review the following figure. Suppose the price of gasoline is $1.60 per gallon. ▪ What would happen to the quantity demanded? . What would happen to the quantity supplied? . At $1.60, is the market in equilibrium, a shortage, or a surplus? P ($ per gallon) $2.20 $1.80 $1.40 $1.20 $1.00 50.60 Excess supply or surplus An above-aquilibrium price Equilibrium price A below-equilibrium price Excess demand D or shortage 300 400 500 600 700 800 900 Quantity of Gasoline (millions of gallons) rise fall surplus shortage no change a shift in demand a shift in supply
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Introduction

Market equilibrium: At the market equilibrium we have demand equals to supply. Or at market equilibrium point the maximum price which the consumers are willing to pay is exactly equals the minimum price at which the sellers are willing to sell.

 

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